Applying gravity model to analyze trade activities of Vietnam

Abstract

This paper applies gravity model in order to analyze bilateral trade activities between Vietnam and 60 countries from 2000 to 2010. We exploited the panel data on international trade of Vietnam taken from the data banks of International Trade Centre, International ‘Monetary Fund and World Bank. The estimated results reveal that economic size of Vietnam, economic size and market size of foreign partners, distance and culture have important - effects on bilateral trade flows between Vietnam and these 60 countries. By applying method of speed of convergence, we also find out that Vietnam has trade potential especially with some new markets such as Africa and Western Asia.

Keywords

• gravity model
• international trade
• vietnam